Another day spent in tight ranges during the Asian session after risk currencies rebounded overnight following an extended early sell-off.
The final data releases for the year gave us the first indications of manufacturing activity for the Asia region in December. Following yesterday's string of disappointments, Japan at least had something to cheer about when the manufacturing PMI data was released. The index rose back above the 50 expansion/contraction threshold (just!) following last month's dip to 49.1 with a rebound to 50.2. For China, the data was not quite so encouraging with the HSBC manufacturing PMI stuck below the 50 mark for the second month running, though there was some improvement from last month's 47.7. The flash estimate a few weeks back suggested a reading closer to 49.0.
Australian data releases were second-tier and showed private sector credit marginally higher in November compared to October with a 0.3 percent m/m increase from 0.2 percent. Housing credit rose 0.5 percent m/m versus 0.4 percent previously and is a further indication that the Australian consumer remains cautious at best and scared at worst but; perhaps more of a concern was the lack of momentum in business lending with flat growth recorded in both October and November.
After looking quite perky at the Asian close yesterday, the EUR succumbed and fell to technical targets at the 1.2850 level as Italy's bond auction proved less than inspiring (yes, yields were lower but there was a shortfall in demand in the shorter tenor) and headline German CPI data came in marginally below forecast at +0.7 percent m/m and +2.1 percent y/y (its lowest reading since March).
Having found some support just above 1.2850, the EURUSD's rebound gathered more steam as US data instilled a better risk appetite. The Chicago PMI reading beat forecasts to hit 62.5, marginally below last month's 62.6 print but encouragingly above the consensus 61.0. The better data from the housing sector continued with pending home sales rising 7.3 percent m/m in November versus a 1.5 percent consensus. While the headline weekly jobless claims data was a mild disappointment compared to recent weeks (rising to 381k from a revised 366k and a forecast 375k), the four-week moving average fell to its lowest level since June 2008 (375k) and is an encouraging sign for payroll data early next year. The other headline disappointment was the weekly Bloomberg consumer comfort index which dipped back to -47.5 from -45.0 but again the 4-week moving average is still posting gains after the recent low in mid-November. All-in-all the data was viewed positively resulting in a reduction in risk aversion and a rebound for the risk currencies.
As we enter into the New Year celebrations over the weekend, China will be releasing its official manufacturing PMI data for December on New Years' Day.
HAPPY NEW YEAR TO ALL AND A HAPPY AND PROSPEROUS 2012!
Data Highlights
- US Initial Jobless Claims out at 381k vs. 375k expected and revised 366k prior
- US Continuing Claims out at 3601k vs. 3600k expected and revised 3567k prior
- US Dec. Chicago PMI out at 62.5 vs. 61.0 expected and 62.6 prior
- US Nov. Pending Home Sales out at +7.3% m/m vs. 1.5% expected and 10.4% prior
- US Dec. Kansas City Fed Manufacturing Activity out at -4 vs. +6 expected and +4 prior
- JP Dec. Markit/JMMA Manufacturing PMI out at 50.2 vs. 49.1 prior
- AU Nov. RPData-Rismark House Prices out at -0.2% m/m vs. revised -0.3% prior
- AU Nov. Private Sector Credit out at +0.3% m/m, +3.5% y/y vs. 0.3%/3.6% expected and 0.2%/3.5% prior resp.
- China Dec. HSBC Manufacturing PMI out at 48.7 vs. 47.7 prior
Upcoming Economic Calendar Highlights (All Times GMT)
- UK Nationwide House Prices (0700)
- Sweden Wages - Non-manual Workers (0830)
- UK BOE Housing Equity Withdrawal (0930)
- US NAPM-Milwaukee (1500)
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